Navarro County Electric Cooperative, Inc

Hamilton County Electric Cooperative, Inc.

Hamilton County Electric Cooperative, Inc. has approved a rate adjustment to be effective February 22, 2008. This adjustment will be reflected on bills received on or about April 1, 2008. This is the first time in 7 years that base rates have been changed. Base rates are the mechanism your cooperative has to generate margins to hire and retain qualified employees, purchase equipment and supplies, and cover principal and interest, system operations and maintenance, and other costs involved in providing electric service to members. The proposed rate adjustment will result in increases in customer charges associated with residential rates, small commercial rates, and security lighting. Residential customer charges will increase from $10.00 to $15.00 per month. Small commercial customer charges will increase from $17.50 to $25.00 per month. Also, all monthly security light charges will increase by $2.00. Additionally, the power cost recovery factor (PCRF) is calculated each month and is a part of each member’s bill. This factor is how your cooperative passes through changes in the cost of purchased power. The cost of doing business has risen sharply since current rates were implemented in 2001. The graph shows how materials and supplies have gone up during the most recent 5-year period for items used everyday, as the Cooperative’s system is improved and expanded. Your board of directors and employees will continue to provide the most reliable service at competitive rates. If you should have any questions concerning this or any other matter, do not hesitate to contact the office at (254) 386-3123.

Costs Have Soared! Years 2002-2007 189% 200% 135% 150% 106%

100% 62% 49% 30% 50%

0% P o l e s C o n d u i t C o n d u c t o r F u e l T r a n s f o r m e r s C o p p e r W i r e Hamilton County Electric Cooperative, Inc. Notice of Rate Change

Notice is hereby given that Hamilton County Electric Cooperative, Inc., (the “Cooperative”) intends to change rates for electric service. Pursuant to Texas Utilities Code Section 41.061, the Cooperative has adopted a resolution approving the rate changes. The rate changes are effective February 22, 2008, or as soon thereafter as may be allowed by law, and will be reflected on the electric bills received on or about April 1, 2008, or as soon thereafter as may be allowed by law.

The Cooperative intends to change its rates for electric service. It is anticipated that the proposed rate changes will increase adjusted test year 12/31/2006 revenues from $25,974,772 to $27,068,240 which is an increase of $1,093,468 annually, or 4.21 percent. The monthly changes in the customer charges are as follows:

Rate Class Change

Residential $5.00 Small Commercial $7.50 Security Lighting $2.00

You may obtain further information concerning the proposed rate changes and/or a copy of the proposed rate changes by calling the Cooperative at 254-386-3123.

A meeting to discuss the proposed rate changes will be held at the Cooperative’s headquarters at 420 North Rice Street in Hamilton, Texas, on the 13th of February, 2008 at 1:00 P.M.

Example of Rate Change for Residential Customers

Residential Single-Phase

Existing Billing Proposed Billing Change

500 kWh $70.35 $75.35 $5.00 1,000 kWh $130.70 $135.70 $5.00 3,000 kWh $372.10 $377.10 $5.00